Yellowtail will give Exxon the best returns in the industry today

Yellowtail will give Exxon the best returns in the industry today — Hess

Jun 11, 2022 News

Kaieteur News – Esso Exploration and Production Guyana Limited (EEPGL)—ExxonMobil Guyana—has pegged its fourth development in the Stabroek Block, namely Yellowtail as providing the best returns in the industry currently.
This was divulged recently by ExxonMobil Guyana partner, John Hess, who heads up Hess Corporation Guyana and was at the time participating in the 38th Strategic Decisions Conference 2022.
He was at the time providing an update on his company’s Guyana operations and informed stakeholders that “Yellowtail which just got approved, the hull is being built and that’s on slate for 2025 and that’s the largest ship that we have built to date which is 250K barrels a day.”
According to Hess, that vessel “will cost more, I think the overall project is about US$10B.”
With this in mind, Hess sought to explain that the offset to that is, “that we are developing over 900M barrels of oil resources where the other developments we are developing a lower amount.”
The Hess Chief Executive Officer as such related that “the breakeven for these four ships is between US$25 and 45 US$ Brent and the Yellowtail project of itself is the best return on the industry today and that’s coming from Exxon.”
According to Hess, with the Liza I & II operations already underway, the coming on-stream of the third Development Payara along with the Yellowtail project will see revenues for Hess increasing by US$1B per each ship for its 30 percent interest in the Stabroek Block.
To this end, Hess noted that with each new production vessel, it would mean secured revenues telling stakeholders, “so it’s not just rate of change for this year, its rate of change in the years ahead and that’s why its durable cash flow story that is unequaled anywhere in the business.”
Meanwhile as it relates to the actual expected production, Hess told stakeholders the first ship Liza Phase I called the Destiny with nameplate of 120,000 barrels of oil daily, has since debottlenecked its operation to the point where it is now running at above 140,000 barrels daily.
He noted that the prospects are for that to continue, “So that’s ahead of schedule.”
As it relates to the second vessel, “Liza Phase II, the Unity” Hess said “that has capacity of 220,000 barrels per day and it is ramping up to that number as we speak so that’s ahead of schedule then the third ship Payara its was supposed to come on-stream 220,000 barrels of oil daily gross, in 2024 its been moved up to the fourth quarter of 2023.”
Following its approval in April last, ExxonMobil finalized its investment decision for the US$10B project
Liam Mallon, President of ExxonMobil Upstream Company at the time had said, “Yellowtail’s development further demonstrates the successful partnership between ExxonMobil and Guyana, and helps provide the world with another reliable source of energy to meet future demand and ensure a secure energy transition.”
According to the ExxonMobil Executive, “We are working to maximise benefits for the people of Guyana and increase global supplies through safe and responsible development on an accelerated schedule.”
The Yellowtail’s production from the ONE GUYANA floating production storage and offloading (FPSO) vessel will develop an estimated resource of more than 900 million barrels of oil.
The US$10 billion project will include six drill centres and up to 26 production and 25 injection wells.
ExxonMobil’s subsidiary, EEPGL is the operator and holds 45 percent interest in the Stabroek Block. Hess Guyana Exploration Ltd. holds 30 percent interest and CNOOC Petroleum Guyana Limited holds 25 percent interest.
At the time, it was also noted that the net share of development costs to be borne by Hess, excluding pre-sanction costs and FPSO purchase cost, is forecast to be approximately US$2.3 billion, of which approximately US$210 million is expected in 2022, US$430 million in 2023, US$585 million in 2024, US$390 million in 2025 and US$295 million in 2026.
“We are excited to sanction our fourth oil development and the largest FPSO to date on the Stabroek Block,” Hess said at the time.

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